Problem Set A | ||||||||||
Mad River Mountain, a downhill ski resort located outside of Columbus, Ohio, offers an all day lift ticket for $60. | ||||||||||
Mad River also offers an adult, season's pass for $150. The pass provides the holder with unlimited access to ski the mountain from the beginning of December until the end of April. | ||||||||||
Mad River expects their season pass holders to use the pass evenly throughout the season. | ||||||||||
Mad River sells a full set of skis for $400. The cost of the skis to Mad River is $200. | ||||||||||
Mad River offers a 60-day money back, satisfaction guarantee on their ski sales. Based on past experience, 10% of customers return their skis. | ||||||||||
Mad River's fiscal year end is December 31. It is Mad River's first year in business so beginning balances are zero. | ||||||||||
On December 2, 2016, a ski club visits the mountain to ski. The ski club purchases a season's pass and set of skis for each of its ten (10) members. Mad River agrees to bill the ski club. | ||||||||||
On January 5, 2017, one customer returns his/her skis. | ||||||||||
REQUIRED: | ||||||||||
1 | Do the journal entry for December 2, 2016. | |||||||||
2 | Do the adjusting journal entries for December 31, 2016. | |||||||||
3 | What will be reported on the 12/31/2016 Income Statement and Balance Sheet? | |||||||||
4 | Do the journal entry for January 5, 2017. | |||||||||
Date | Particulars | Debit | Credit |
2-Dec | Accounts Receivable | $ 5,500.00 | |
Revenue - Season's Pass | $ 1,500.00 | ||
Revenue - Skis | $ 4,000.00 | ||
31-Dec | Allownace for return and sales | $ 400.00 | |
Accounts Receivable | $ 400.00 | ||
Part 3 | |||
Income Statement (extract) | |||
Revenue | $ 5,500.00 | ||
Less: Allownace for return and sales | $ (400.00) | $ 5,100.00 | |
Balance Sheet (extract) | |||
Assets | |||
Accounts Receivable | $ 5,500.00 | ||
Part 4 | Allownace for return and sales | $ 400.00 | |
Accounts Recievable | $ 400.00 |
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